US - Iran crisis threatens regional peace

U.S. President Donald Trump and his Iranian counterpart Hassan Rouhani.

The conflict between the US and Iran worsened with major threats to Middle East regional peace, with Iran giving a 60 day warning of its own actions on nuclear research, in response to continued US sanctions on the country, and the recent military moves by the US.

This comes one year after US President Donald Trump withdrew from the Joint Comprehensive Plan of Action (JCPOA) on enriched uranium and heavy water, signed with Iran in 2015, after lengthy negotiations under the Barack Obama presidency, by the US, UK, France, Russia, China and Germany, which has been approved by the UN Security Council too.

Iranian President Hassan Rouhani said he would keep enriched uranium stocks in the country rather than sell them abroad, as earlier agreed, but also threatened to resume production of more-highly-enriched uranium in 60 days if other signatories - did not act to protect Iran from US sanctions. The 2015 JCPOA accord was aimed at curbing Iran's nuclear ambitions in return for relief from sanctions that prevailed. Since the US left the deal last year, it has imposed new sanctions, strongly hitting Iran's economy and raising Iran-US tensions.

The Iranian economy is further weakened after recent US warnings to other countries of economic sanctions if they purchased Iranian oil, the main income source for Iran. The situation has also worsened through the Trump administration's deploying of a carrier strike group this week – a US carrier and bomber task force - in response to alleged 'troubling' Iran action in the region.

Under the JCPOA Iran is required to sell its surplus enriched uranium abroad, rather than keep it, as the material, a by-product of Iran's civilian nuclear power generation, can be used in the manufacture of nuclear weapons. By selling it abroad, Iran can continue to generate nuclear power and the parties to the agreement can be sure it is not building nuclear weapons.

Although there have been strong allegations by both the US and Israel that Iran is not complying with the terms of the accord, the global nuclear watchdog, the International Atomic Energy Agency IAEA, has continuously reported since the JCPOA was signed Iran is strictly following the conditions of the agreement, and is not active in nuclear weapons or related material production.

The European Powers – EU, UK, France and Germany – who face a major challenge on making Iran keep to the JCPOA amidst the US sanctions and related rising economic hardship, have said they remain committed to the Iran nuclear deal but that they "reject any ultimatums" from Tehran to prevent its collapse. They have noted Iran’s move “with Great concern”, while Iran's economy is now sliding towards a deep recession, the value of its currency has dropped to record lows, and its annual inflation rate has quadrupled. Iran’s position is the related sales of nuclear related material sales would resume if the remaining parties to the JCPOA - the UK, France, Germany, Russia and China - met their commitments to protect Iran's banking and oil sectors within 60 days.

Iran’s reaction to the tightening US sanctions and what is seen as the new US military interference in the Gulf Region, shows a rising threat of military confrontation, especially with the strategy of the US National Security Advisor John Bolton and Secretary of State Mike Pompeo towards moves for a regime change in Iran, and increased confrontations with Iran backed by Saudi Arabia and other pro-Saudi Arab states.

Trump and China

There are increasing trade hostilities between the US and China, as President Trump has said China "broke the deal" in current trade talks, ramping up hostilities ahead of further negotiations between the two sides.

Beijing said it would retaliate with "necessary countermeasures" if the US raises tariffs on Chinese products, while Mr. Trump has vowed to more than double tariffs on $200bn of Chinese goods later this week.

President Trump sent shockwaves through global markets by threatening to hike tariffs, although earlier expressing hope for a deal with China by the end of this month. Trump’s threat had come with positive back-to-back economic reports showing strong US jobs and GDP growth, which would bring him a good political image in the current context.

The resultant escalation of the trade war between US and China has already sent waves across the world financial markets. Global stock markets fell sharply in response to the prospect of higher US tariffs and there was increased caution among investors. The US trade indexes dropped sharply and China’s Hang Seng Index was down more than 2% and the Shanghai Composite Index shed nearly 1.5%.

If the Trump warning is to be implemented raising tariffs on Chinese imports to 25% from 10% would lead to the cost of a vast array of Chinese-made electrical equipment, machinery, car parts and furniture going up sharply, affecting the US consumers who are the main purchasers of these products. This could have a negative impact of the current acceptance of the Trump economic policies.

China will also be affected by the new tariff hikes, if implemented, but its imports from the US are smaller in content, and are more to do with agricultural and industrial inputs. China is also able to look to the sale of commodity products affected by the US tariff hike to other Asian countries that are increasing imports of Chinese made consumer goods.

The new warning by Trump was also a sharp turn from the optimism the US administration had conveyed over the past several months, as negotiating teams jetted between Beijing and Washington. In talks that were described as friendly the trade teams believed they were forging significant progress on Trump's goal of striking a deal that ends some of China's economic practices.

As the trade talks between US and China continue, there is continuing uncertainty on the trade, political and international relations between the two countries, as the 2020 US Presidential Election approaches, and President Trump seeks re-election with strong political attacks on China.

India - Delhi

As the Indian Parliamentary Election continues the capital city New Delhi was the centre of major political activity this week with huge rallies for the ruling Bharathiya Janatha Party – BJP- led by Prime Minister Narendra Modi, and the largest rival Congress Party, with a campaign by its senior leader Priyanka Gandhi Vadra, the sister of Congress leader Rahul Gandhi. The Aam Aadmi Party (AAP) that controls the Delhi administration also campaigned strongly with its leader Arvind Kejirwal.

At the massive BJP rally in New Delhi Modi kept his emphasis on national security and the need to be tough on terrorism. He had a lot of criticism for not doing enough for the people, especially critical of previous Congress records in government, and alleging them of being corrupt and builders of family dynasties.

He also spoke on the economic and social accomplishments of the BJP government in the past five years, a topic that is having increased criticism from Opposition quarters. The emphasis of Modi’s campaign speeches is the need to keep him in power for another five years. Most analysts now see that Narendra Modi has seen his personal impact on the people, as the source for whatever success the BJP will achieve in this election, and is pushing his image as the winner of the coming poll.

He has called himself the ‘Watchman’ of the nation, bringing focus to securing India’s borders, reminding the people of the attack by Pakistani militants in Jammu-Kashmir earlier this year, and giving warnings of terrorist forces in many parts of India. Rival parties and the media asked security guards what they thought of Modi’s watchman claim. Many said they were underpaid and had little economic benefits.

Modi also took his personal message to the people by asking voters to ‘blossom the lotus’ at every polling booth, the lotus being the symbol of the BJP, and adding that ‘all your votes will come to Modi’s account’. Narendra Modi remains the key player as the poll campaign continues.

There were huge crowds as the Congress Party’s Priyanka Gandhi Vadra launched her road show in New Delhi this week. Throngs of people followed Priyanka Gandhi’s campaign bus through the streets of East Delhi. Many saw her as a sign of hope for the opposition in the past five years, and a good challenge to BJP propaganda moves.

Priyanka Gandhi Vadra -- the youngest member of India's Nehru-Gandhi political dynasty -- took on a formal leadership role in the main opposition Congress Party in January this year. The 47-year-old mother of two was put in charge of Congress' election campaign in a critical battleground: the eastern half of Uttar Pradesh, India's largest and most politically significant state, with a population of 200 million people.

Descended from three former Prime Ministers -- including Jawaharlal Nehru, the country's first leader – Priyanka has long been seen as a potential political leader, with many likening her appearance and campaign style to those of her grandmother, former Prime Minister Indira Gandhi.

During campaign rallies in this election season, she has focused on women's issues and the employment crisis in the country. Although greatly expected, the Congress did not put her as its candidate to the Varanasi electorate to contest Narendra Modi. But she remains a politician with rising popularity, and even out passing the support for brother and Congress leader Rahul Gandhi.

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